Power plant bill would kill PSNH plans for Berlin

Published: May 9, 2006

Public Service of New Hampshire would abort its plans for a 50-megawatt wood-fired power plant in Coos County if a House bill survives its expected committee of conference the way it left the Senate May 4.
An amendment by Senate President Ted Gatsas would force the regulated utility to share half its losses or profits with ratepayers if it wins a bidding process this summer.
“If the bill passes as is, not only would Public Service not build a plant, but no one else would,” warned PSNH spokesman Martin Murray. He said the company is quite willing to absorb some of the risk of a new plant, as it did in building a 50-megawatt wood-fired plant that begins operations later this year at the Schiller Station plant in Portsmouth. But the profit-sharing clause is a deal-breaker.
“That pretty much rules us out,” he said. “We’re a regulated company, and we only want to compete in a regulated field. If the state is comfortable letting us build at a known cost, then we’re willing to go ahead.”
PSNH agreed to eat half of any losses in building the Schiller plant, Murray said, and the PUC was satisfied the construction would cost less than $75 million. He expected a similar scenario in the North Country, but not a cut in regulated profit margin from 9.6 percent to 4.8 percent.
Another part of the bill that alarms Murray is the lack of the word “new” in front of “generators,” which means existing companies can bid to supply the North Country power. He said four existing wood-fired plants might win without the expense of a massive construction project.
“Everyone else would actually have to build a new power plant,” Murray said. “And their collective power adds up to just over 60 megawatts. There’s a possibility they would keep operating, but with a subsidy from PSNH customers. Not one new chip of wood would be burned. It would give zero help to hundreds of loggers. Either we want to foster new renewable power or we don’t.”
The four wood-fired plants in Bridgewater, Bethlehem, Tamworth and Springfield lose their long-term contracts with PSNH either this year or next - the contracts are at prices that exceed the market rate.
Sen. John Gallus, R-Berlin, told colleagues that companies from Boston and Baltimore have inquired about building a plant in the area.
“Their goal is just to slam Public Service,” Gallus said. “I struggle to understand how the merchant plants have to respond to our request for proposals at all. The only one we control is Public Service. The amendment sends the message we don’t want them to go to Berlin. It’s a disincentive.”
Senator Peter Burling (D-Cornish) warned lawmakers the 50/50 formula might have “scary” consequences.
“Will it frighten off applicants?” he asked at a Senate Finance Committee work session.
Gatsas replied he doesn’t care who provides the proposed power, as long as ratepayers pay less.
“It can be Public Service or an independent,” Gatsas said. “That’s my opinion, from doing a few deals. Maybe the ratepayers could see an even bigger profit if the power is sold into the grid.” - CHRIS DORNIN/GOLDEN DOME NEWS

This article appears in the April 28 2006 issue of New Hampshire Business Review